Marketing: An Introduction 14th Edition PDF

Marketing: An Introduction Fourteenth Edition Chapter 10 Marketing Channels: Delivering Customer Value Copyright © 2020, 2017, 2015 Pearson Education, In...

Marketing: An Introduction Fourteenth Edition Chapter 10 Marketing Channels: Delivering Customer Value Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Objectives Outline (1 of 4) 10.1 Explain why companies use marketing channels and discuss the functions these channels perform. 10.2 Discuss how channel members interact and how they organize to perform the work of the channel. 10.3 Identify the major channel alternatives open to a company. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Objectives Outline (2 of 4) 10.4 Explain how companies select, motivate, and evaluate channel members. 10.5 Discuss the nature and importance of marketing logistics and integrated supply chain management. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved First Stop: Netflix’s Channel Innovation: Finding the Future by Abandoning the Past Netflix has led the howling pack by doing what it does best—revolutionize distribution. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Objective Outline 10-1 Explain why companies use marketing channels and discuss the functions these channels perform. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Supply Chains Upstream partners supply the raw materials, components, parts, information, finances, and expertise needed to create a product or service. Downstream partners serve as distribution channels that link the firm and its customers. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Value Delivery Network (1 of 2) A network composed of the company, suppliers, distributors, and, ultimately, customers who partner with each other to improve the performance of the entire system in delivering customer value Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Value Delivery Network (2 of 2) Toyota manages a huge network to create customer value and establish the brand’s “Let’s Go Places” promise. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Marketing Channels (Distribution Channels) Interdependent organizations that help make a product or service available for use or consumption Channel decisions – Affect every other marketing decision – Can lead to competitive advantage – May involve long-term commitments to other firms Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Figure 10.1 How a Distributor Reduces the Number of Channel Transactions Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved How Channel Members Add Value Intermediaries create greater efficiency in making goods available to target markets. Marketing intermediaries transform the assortments of products made by producers into the assortments wanted by consumers. Intermediaries bridge the major time, place, and possession gaps that separate goods and services from users. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Key Functions Performed by Channel Members Help to complete transactions Information Promotion Contact Matching Negotiation Help to fulfill the completed transactions Physical distribution Financing Risk taking Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Number of Channel Levels (1 of 2) Channel level: A layer of intermediaries that performs work in bringing the product and its ownership closer to the final buyer – Direct marketing channel: No intermediary levels – Indirect marketing channels: One or more intermediary levels Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Number of Channel Levels (2 of 2) Types of flows that connect the institutions in the channel: – Physical flow of products – Flow of ownership – Payment flow – Information flow – Promotion flow Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Figure 10.2 Consumer and Business Marketing Channels Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Objective Outline10-1 Summary Value delivery network Intermediaries form the marketing channel (or distribution channel) Marketing channel functions: – Transaction, information, communication, matching, negotiation, physical distribution, financing, and risk taking Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Objective Outline 10-2 Discuss how channel members interact and how they organize to perform the work of the channel. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Channel Behavior (1 of 2) Channel conflict: Disagreements among marketing channel members on goals, roles, and rewards – Horizontal conflict occurs among firms at the same level of the channel. – Vertical conflict occurs between different levels of the same channel. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Channel Behavior (2 of 2) “There’s a huge connection” between franchisee satisfaction and customer service. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Figure 10.3 Comparison of Conventional Distribution Channel with Vertical Marketing System Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Vertical Marketing Systems A vertical marketing system (VM S) consists of producers, wholesalers, and retailers acting as a unified system. There are three types of VM Ss: – Corporate – Contractual – Administered Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Horizontal Marketing System (1 of 2) Two or more companies at one level join together to follow a new marketing opportunity. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Horizontal Marketing System (2 of 2) Horizontal marketing systems: Target partners with CV S Health, which operates store-within-store pharmacies to the benefit of all—Target, the partners, and their mutual customers. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Multichannel Distribution Systems A single firm sets up two or more marketing channels to reach customer segments. Advantages: – Expansion of sales and marketing coverage – Tailor-made products and services for the specific needs of customer segments Disadvantages: – Harder to control – Generates conflict Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Figure 10.4 Multichannel Distribution System Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Disintermediation (1 of 2) Occurs when product or service producers cut out marketing channel intermediaries or when radically new types of channel intermediaries displace traditional ones Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Disintermediation (2 of 2) Toys “R” Us pioneered the superstore format that once made it the go-to place for buying toys. Competition has forced the retail giants to close down operations and shutter its stores. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Objective Outline 10-2 Summary Horizontal and vertical channel conflict Conventional distribution system, vertical management system (VM S) and horizontal marketing system Multichannel distribution system Disintermediation Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Objective Outline 10-3 Identify the major channel alternatives open to a company. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Channel Design Decisions Marketing channel design involves designing effective marketing channels by: – Analyzing customer needs – Setting channel objectives – Identifying major channel alternatives – Evaluating the alternatives Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Major Channel Alternatives Types of intermediaries refers to channel members available to carry out channel work. Number of intermediaries to use – Intensive distribution – Exclusive distribution – Selective distribution Responsibilities of each channel member Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Designing International Channels Channel strategies should be adapted to the existing structures within each country. Distribution systems can have many layers and a large number of intermediaries. Customs and government regulations can restrict distribution in global markets. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Objective Outline 10-3 Summary Channel design begins with assessing needs, objectives and constraints Company determines major channel alternatives – Types, number of intermediaries and channel responsibilities Channel alternatives evaluated according to economic, control and adaptive criteria Channel management—selecting qualified intermediaries, motivating them and evaluating regularly Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Objective Outline 10-4 Explain how companies select, motivate, and evaluate channel members. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Marketing Channel Management (1 of 2) Selecting channel members Managing and motivating channel members Evaluating channel members Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Marketing Channel Management (2 of 2) Selecting channels: Even established brands may have difficulty getting desired channels. For example, Amazon refuses to sell many Google-branded products. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Public Policy and Distribution Decisions Exclusive distribution Exclusive dealing Exclusive arrangements (Clayton Act) are legal as long as the parties – Do not substantially lessen competition or tend to create a monopoly – Enter into the agreement voluntarily Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Objective Outline 10-4 Summary Marketing channel management calls for selecting, managing, and motivating individual channel members and evaluating their performance over time. Company must sell not only through the intermediaries but also with them. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Objective Outline 10-5 Discuss the nature and importance of marketing logistics and integrated supply chain management. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Marketing Logistics (Physical Distribution) Planning, implementing, and controlling the physical flow of materials, final goods, and related information from points of origin to consumption Customer-centered logistics: Marketplace backwards to the factory or sources of supply – Outbound logistics – Inbound logistics – Reverse logistics Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Figure 10.5 Supply Chain Management Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Marketing Logistics and Supply Chain Management The goal of marketing logistics is to deliver a targeted level of customer service at the least cost. Logistics functions include – Warehousing – Inventory management – Transportation – Logistics information management Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Warehousing (1 of 2) Storage warehouses store goods for moderate to long periods. Distribution centers are large, highly automated warehouses that receive goods, take orders, fill them, and deliver goods to customers. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Warehousing (2 of 2) Amazon employs teams of super-retrievers—Day-Glo- orange Kiva robots. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Inventory Management Should be done in a cost effective and profitable manner Just-in-time logistics systems Radio frequency identification (RFI D), smart tag technology, gives the physical location of a product. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Transportation (1 of 2) Companies can choose among many transportation modes, including truck, rail, water, pipeline, and air. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Transportation (2 of 2) Factors affected by choice of transportation Pricing of products Delivery performance Condition of goods Customer satisfaction Modes Trucks, railroads, water carriers, pipelines, air carriers, and the internet Multimodal transportation Combining two or more modes of transportation Piggyback, fishyback, trainship, and airtruck Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Logistics Information Management Flows of information closely linked to channel performance Information can be shared and managed through – Electronic data interchange (ED I) – Vendor-managed inventory (VM I) Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Integrated Logistics Management Emphasizes teamwork both inside the company and among all the marketing channel organizations – Forming cross-functional teams inside the firm – Building logistics partnerships – Outsourcing to third-party logistics providers for functions required to get a client’s product to market Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Objective Outline 10-5 Summary Marketing logistics—outbound logistics, inbound logistics, and reverse logistics Major logistics functions—warehousing, inventory management, transportation, and logistics information management Integrated supply chain management Third-party logistics (3P L) providers Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Objectives Outline (3 of 4) 10.1 Explain why companies use marketing channels and discuss the functions these channels perform. 10.2 Discuss how channel members interact and how they organize to perform the work of the channel. 10.3 Identify the major channel alternatives open to a company. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Objectives Outline (4 of 4) 10.4 Explain how companies select, motivate, and evaluate channel members. 10.5 Discuss the nature and importance of marketing logistics and integrated supply chain management. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Copyright This work is protected by United States copyright laws and is provided solely for the use of instructors in teaching their courses and assessing student learning. Dissemination or sale of any part of this work (including on the World Wide Web) will destroy the integrity of the work and is not permitted. The work and materials from it should never be made available to students except by instructors using the accompanying text in their classes. All recipients of this work are expected to abide by these restrictions and to honor the intended pedagogical purposes and the needs of other instructors who rely on these materials. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved